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Reducing the Racial Wealth Gap in Minnesota

Children's advocates are calling for new federal policies to help low-income families save for their futures. (iStockphoto)
Children's advocates are calling for new federal policies to help low-income families save for their futures. (iStockphoto)
January 20, 2016

ST. PAUL, Minn. - As in many states, some Minnesota families still are struggling in the wake of the Great Recession. A new policy brief from the Annie E. Casey Foundation shows wide gaps in savings between white families and families of color.

Even a small federal investment in universal children's savings accounts could lead to big long-term benefits, according to the brief. Beadsie Woo, a senior associate for the foundation's Center for Community and Economic Opportunity, also suggested making the federal "My Retirement Account" program more accessible, to set more families up for future success.

"We see that those families are more self-sufficient because they have their own savings to draw on," she said. "Over time, the number of people enrolled in benefits decline."

Woo said the research shows that the racial wealth gap is growing, and puts children of color at a huge disadvantage. From 2010 to 2013, the brief said, white families saw their net worth increase by 2 percent, while black and Latino families saw drops of 34 percent and 15 percent, respectively.

Minnesota already has taken some steps, such as getting rid of the savings limits for people on the Supplemental Nutrition Assistance Program. But the state still has a $2,000 savings cap for people in the Temporary Assistance to Needy Families program. Woo suggested a federal policy change that allows families to save up to $12,000 - roughly equal to three months' wages - without being dropped from public assistance. She said it's important for kids as well as parents.

"There are common-sense federal policies that can create more opportunities for families to save, and those change the life course for their children," she said. "Children whose families can save will do better in school and have stronger outcomes through access to opportunities."

Other recommendations from the brief include increasing access to home ownership through the federal Department of Housing and Urban Development's Family Self-Sufficiency program.

The report is online at aecf.org.

Brandon Campbell, Public News Service - MN